Release Date: November 13, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Worksport Ltd (NASDAQ:WKSP) reported a significant 581% year-over-year increase in revenue for Q3 2024, reaching approximately $3.1 million.
• The company has successfully expanded its business-to-consumer (B2C) sales, with online sales jumping from $21,000 in Q3 2023 to $1.59 million in Q3 2024.
• Worksport Ltd (NASDAQ:WKSP) received a $2.8 million innovation and growth grant from the State of New York, highlighting confidence in its vision and technological achievements.
• The company has commenced sales to the US government, unlocking potential for significant new growth in the future.
• Worksport Ltd (NASDAQ:WKSP) is preparing to launch new high-margin products, including the A L four Autoco cover and the core and solar portable energy system, which are expected to drive future revenue growth.

Negative Points

• The company experienced temporary margin erosion in Q3 due to a strategic production slowdown, impacting short-term profitability.
• Despite the revenue growth, Worksport Ltd (NASDAQ:WKSP) is still working towards achieving cash flow positivity, which is projected for 2025.
• The company faces challenges in transitioning from private label sales to building its own brand, which may impact revenue distribution.
• Worksport Ltd (NASDAQ:WKSP) has not yet provided updated revenue guidance for 2024, despite indicating it will exceed previous estimates.
• The company anticipates potential challenges in expanding production capacity beyond 200 covers per day, which may require additional capital investment.

Q & A Highlights

• Warning! GuruFocus has detected 5 Warning Signs with WKSP.

Q: Can you clarify the revenue guidance for 2025, particularly the contribution from new products like the A L four? A: Steven Rossi, CEO: We anticipate the A L three to generate $20 million next year. The A L four, being a new product, will initially contribute less but is expected to become a significant revenue driver in subsequent periods as we refine production processes and expand capabilities.

Q: How do you plan to achieve the projected gross profit margin growth in the B2C segment? A: Steven Rossi, CEO: The growth will be driven by economies of scale. We have the infrastructure and resources in place to achieve revenue targets without significant additional expenditures. As we perfect our processes, we expect to increase profitability through efficiency gains.

Q: What is the current mix of online sales across different platforms, and how do you plan to manage it? A: Steven Rossi, CEO: Over 90% of our direct-to-consumer sales are through worksport.com. We avoid platforms like Amazon to maintain brand integrity and focus on quality. We aim to support local dealers, which will be a significant part of our strategy moving forward.

Q: Can you provide more details on the expected capital expenditure for expanding production capacity beyond 200 covers per day? A: Steven Rossi, CEO: We have already invested in infrastructure anticipating expansion. Additional equipment costs would be around $3 to $3.5 million, potentially financed by vendors at no interest, allowing us to use profits to cover these costs.

Q: What are your plans for increasing institutional coverage and ownership of the company? A: Steven Rossi, CEO: Institutional ownership typically increases with higher market caps. As we execute our strategy and grow, we expect more institutions to invest. We are building relationships with analysts based on trust and transparency to increase coverage.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.